Pilot Medicaid Reforms in Florida See Success

Hadley Heath

The end-of-year health care conversation is largely focused on Medicare, the government insurance plan for people over 65. Rep. Paul Ryan's plan for reform is seeing some redemption this week as Politifact chose for its "Lie of the Year" the claims made by Democrats that Ryancare would "end Medicare." And in 2011's final weeks, Congress is trying to figure out what to do about Medicare's Sustainable Growth Rate (SGR), the reimbursement formula used to pay doctors who treat Medicare patients.

But in all the melee about Medicare, don't miss this good news about Medicaid:

As in Medicare, doctors who treat Medicaid patients often aren't reimbursed at market rates. In fact, the situation for Medicaid is even worse, making it difficult for people on the program to make appointments with doctors. But in a few counties in Florida, a reform pilot program is showing great results.

In the pilot program, beneficiaries can choose among private plans from various providers with various benefits. Also, a rewards system incentivizes healthy behavior. According to the Foundation for Government Accountability, a Florida think tank, the pilot program has seen enormous success in health outcomes and improvement, and in satisfaction among enrollees:

Reform Pilot patients had better health outcomes for 64 percent of measures on a widely-used health care effectiveness benchmarks, HEDIS, compared to patients confined to traditional Medicaid. In 68 percent of measures, Reform Pilot patients had greater health improvement compared to non-Reform patients. Reform Pilot patients are also happier with their care and services, with 83 to 100 percent of satisfaction measures among Reform Pilot patients at or above national benchmarks for Medicaid managed care and commercial HMO plans.

It. gets. even. better.

Savings for taxpayers of course! The program has already saved taxpayers $118 million annually, and if the entire state of Florida adopted a similar reform plan, the state could save $901 million annually. The Heritage Foundation estimates that nationwide, reforms like this could save American taxpayers $28.6 billion.

The explanation behind this is simple: When people are given more individualized responsibility and choice in the marketplace, they want to maximize the value of the insurance they are getting. Competition in the private market is what holds insurers accountable to enrollees, because when they are dissatisfied, they can move to other plans.

Of course, right now, Medicaid patients can't do that. If they are dissatisfied with the national program, there is little they can do. The program is aimed at helping marginalized, impoverished people - the people who have the least influence in the public dialogue.

Leaders in Washington have long been aware of Medicaid's problems. But instead of addressing the systemic problems, Congress voted in 2010 to expand the Medicaid program and essentially take control of it away from the states with the passage of the Affordable Care Act. In fact, about one half of the law's projected gains in health insurance coverage were due to the expansion of Medicaid. This isn't a healthy way to expand health insurance coverage, given that the program is already strained, and current beneficiaries struggle to get medical care. (This is a great illustration of the important difference between health insurance and health care).

Well, the Medicaid expansion hasn't gone over too well. In the lawsuit involving 26 states that is now challenging ObamaCare at the Supreme Court, one of the claims that the High Court will consider is whether the federal government acted coercively by enacting the Medicaid expansion.

It will be important for the Court to rule on the Constitutionality of this issue. The implications will be huge for federalism, and the many federal-state programs.

But even if SCOTUS deems this provision Constitutional, the Medicaid expansion is bad policy. It disregards the drivers of Medicaid's financial problems. It will overload the Medicaid rolls. But most importantly, it takes away the very important opportunity to perform statewide policy experiments.

How will we know what reforms work if states aren't allowed to try what is best for their populations?

In the midst of all this, even the Obama Administration admits that Florida's pilot program is a worthwhile test. The program has been underway since 2006, but on Dec. 15, the White House granted the program another two-year extension.

It's imperative that our nation address the deep-rooted problems with the Medicaid program. Instead of expanding it, we should be reforming it, to better target and serve their people who need it most. We can do better by our impoverished compatriots than the raggedy safety net currently offered by Medicaid. By infusing patient choice into the system, Florida's pilot counties are taking a step in the right direction.

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.